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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | JANUARY 9, 2001 COMPANY CLOSEUP By Jeanette Brown Why Hummingbird Is Soaring: Data Portals The Toronto software company takes wing with its EIPs -- customized private Web networks with powerful search engines
First, though, Dickstein Shapiro had to find software that could do that, and more. It settled on Hummingbird Ltd., a Toronto-based software company that builds enterprise information portals (EIPs). Simply put, an EIP is a customized private Web network with a souped-up search engine that puts vast stores of information at the fingertips of those who need it. Analysts say that Hummingbird has an edge on plenty of competitors because it allows employees to search, analyze, and manage data in corporate databases, as well as sift through e-mail, spreadsheets, and Web pages. And they can reach it all from one desktop browser using one password. "Hummingbird has a technology that sits overtop of the various applications and interacts with all of them," says David Wright, an analyst at Toronto-based investment bank Nesbitt Burns. $7 BILLION MARKET. That coverage has helped place Hummingbird's name in the software big leagues. A survey conducted in May by online research firm Survey.com showed that the company trailed only Microsoft and IBM in terms of recognition among more than 1,000 IT decision-makers interviewed. Many of the 100-odd companies competing with Hummingbird in the EIP space offer more limited capabilities. For instance, they might scour internal databases only, not Web sites or other documents. Most executives, though, want an all-in-one solution on their desktop. And plenty are preparing to spend the money to put one in place. Ovum, a Boston-based technology research firm, projects that the EIP market will grow to $7 billion by 2005, vs. $1 billion today. A survey in September by Delphi Group in Boston showed that 27% of more than 1,000 companies plan to install corporate portals this year. "The educational stage is coming to an end," says Carl Frappalo, executive vice- president of Delphi. "People have finally realized what an enterprise information portal is and what it does. Now they are saying, 'O.K., let's get one.'" Even police departments are getting into the act. In Detroit, 75 police agencies in four counties use Hummingbird's software to keep track of the more than 2 million crimes committed every year. Supervisors can run a query, say, of how many robberies took place by precinct, by time of day, even by whether it was rainy or clear. The hope? That by using the information they will be able to marshal personnel and resources quickly and efficiently in order to nab the culprits before they strike again. GROWTH SPURT. At Dickstein Shapiro, while the needs are slightly more mundane, they are no less important to the business at hand. Lawyers can now search by key phrase through more than 15,000 e-mails drafted every day, helping them retrieve an item that they know they've seen but can't remember where. The EIP push is a new flight path for Hummingbird. CEO Fred Sorkin, a native of Lithuania, founded the company in 1984 to make software that connected previously incompatible operating systems. When growth in that market slowed in the mid-'90s, he started Hummingbird's transition to EIPs. "The market was in an embryonic stage, and it was absolutely the right time to enter," says Sorkin. The challenge for Hummingbird now is to sign up more and bigger customers, especially in the U.S., where the company's sales pale when compared with its activities in Europe. Among its customers there: British Telecom, Deutsche Telekom, and France's Alcatel. "They have everything they need in terms of technology," says Erick Brethenoux, an analyst at Lazard Frères & Co. "What they need to do now is build up their marketing and let people know that they are there." No one realizes that better than Hummingbird's Sorkin. He says he'll increase the company's sales force this year by 15% to 20%, add seminars and exhibitions, and pump up the advertising budget by as much as 30%. "What I need now is to establish a leadership position in the EIP market," says Sorkin. "I plan during this year to take the No. 1 place." REVENUE ROCKET. Sound like big talk for a company that lost money in its latest fiscal year? Not necessarily. Since 1998, Sorkin has spent $400 million to buy eight companies. Among them: PCDocs, which makes document-management software, and Andyne, which sells software to manage corporate databases. Although those and other purchases helped push the company into the red with a net loss of $2.7 million in the year ending Sept. 30, 2000, executives now say they are ready to provide a comprehensive EIP, continue growing, and make money again. It's starting to show on the top line: revenue was up 43%, to $237 million, in 2000. Revenues today are split evenly between EIP and connectivity, but Sorkin expects EIP sales to pull ahead of the company's original moneymaker by 10% this year. Analysts agree that Hummingbird has all the pieces in place. All it has to do now is convince potential customers that they can sing in unison.  Jeanette Brown covers e-business for BusinessWeek in New York  | | |
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